A lack of succession planning, the costs of fighting cyberattacks and competition with online mortgage companies that have no brick and mortar branches are some of the reasons the number of banks in Arkansas has fallen by 35 percent over the past decade, financial experts said.
The number of institutions could drop another 30 percent in the next 10 years, said Phil Baldwin, chief executive officer of Citizens Bank in Batesville, which has about $725 million in assets.
“I think for really, really small banks in very small markets, there could be a time when there is no value there anymore,” Baldwin told the Arkansas Democrat-Gazette. “The bigger banks in Arkansas right now are probably not interested in buying small banks. They’re so big it doesn’t matter. They are out buying big banks.”
Bankers are feeling the competitive pinch, too, from businesses like Wal-Mart and Rocket Mortgage — a subsidiary of Quicken Loans and one of the largest mortgage lenders in Arkansas.
“(Rocket Mortgage does) everything online and they have no branches,” Baldwin said. “And small banks are competing against that.”
There were 161 banks based in Arkansas at the end of 2005 and 104 at the end of 2015 — a decline of 35 percent.
In Arkansas, there are 11 banks with more than $1 billion in assets, 35 between $970 million and $205 million and 58 with less than $200 million in assets.
The lack of succession planning is one of the causes of bank mergers because there are no younger members of the family moving into management, said Garland Binns, a Little Rock banking attorney with the Dover Dixon Horne firm.
“The younger members of the family move away and gravitate to larger metropolitan areas, where there is more opportunity for employment,” Binns said.
Sean Williams, chief executive officer of First National Bank of Wynne, said banks need to form partnerships with each other and assist with compliance issues.
“We’ve got to figure out how to help one another,” Williams said. “It’s going to be a challenging environment.”